MILWAUKEE ELECTRIC TOOL, A MANUFACTURER OF heavy-duty?power?tools?for the construction and manufacturing industries since 1924, has very focused goals for its?Internet?strategy. The company didn’t want to have the flashiest site on the Web, and it wasn’t going to try to open a new revenue stream with direct sales to the main users of its products: construction and industrial trade professionals, says systems manager Cindy Thoenes.
“We came to a conclusion that where we see value for us in the Net is to support our existing distributor network. And we were going to support that network by improving?customer service,” Thoenes says.
Existing Business Scenario
Until last year, Milwaukee Electric Tool kept a low profile on the Internet. The company launched its first site in 1997 to provide basic information about its distributors, history, and products. The firm is a subsidiary of Atlas Copco AB, a publicly traded global industrial machine-tools conglomerate based in Stockholm.
By late 1999, the company realized that its original site, based on HTML technology, wasn’t scalable, didn’t effectively serve customers, and couldn’t be readily updated without the services of a trained HTML developer, Thoenes says. “We wanted to find a way to let the people within Milwaukee maintain their own content. And we had been playing around with Lotus Notes as a solution for that,” she adds.
But first Milwaukee Electric Tool decided it wanted help in formulating its Web strategy. The company called in IBM’s global-services unit to take a look at its business and suggest the best way to tailor its Web strategy to its market and operations, Thoenes says.
To do that, the company decided to take a two-pronged approach to Web?marketing. It would produce an improved marketing Web site that would inform the public at large about its active promotional programs, history, and products. The site would allow retail customers to enter their ZIP codes to search for the nearest hardware store, home-product outlet, or industrial-supply center that sold Milwaukee tools.
Then there would be a separate secure sales extranet that would allow distributors to search the company’s product catalog and order equipment. “Our audience is people who make a living using tools,” says Dennis Pfeil, Milwaukee Electric Tool’s director of information services. The distributor extranet had to be strictly a business-to-business site, he adds.
Internet-Based Business Solution
But before Milwaukee Electric Tool launched the distributor site, the company realized it had to revise its general business systems, Pfeil says. Before it started formulating its Internet strategy, the company didn’t have a consistent data structure, he adds.
Business systems were poorly integrated, and the company had to contend with duplicate systems that provided generally poor and inconsistent data. “From our viewpoint, it was absolutely necessary that we get those pieces cleaned up,” before they tried to build a Web distributor sales system on top of the old data infrastructure, Pfeil says. “We felt very strongly that the foundation of a good Web site was going to be a good back-end business system.”
To achieve this, the company implemented the JD Edwards Enterprise Resource Planning system, which provided the data infrastructure the company needed to support its Web strategy. This included consistent data, accurate status reporting, customer-transaction histories, and more up-to-date pricing information.
The rest of the Milwaukee Electric Tool Web infrastructure would be mainly based on IBM hardware and software, including AS/400 processors, the Web-Sphere application server, Lotus Domino, and Notes. The product catalog that supports the public Web site and the distributor extranet is based on DB2. However, after IBM completed its work on Milwaukee Electric Tool’s Internet strategy, the company turned to another Web-consulting firm to actually implement the plan.
To do the job, Milwaukee Electric Tool instead decided to work with Eviciti, an independent e-business and information systems consultant based in Indianapolis. Eviciti was one of 10 companies that responded to Milwaukee Electric Tool’s request for proposals. Of those, Eviciti showed that it dearly understood what the company wanted to achieve with the resources available to it.
Milwaukee Electric Tool was originally introduced to Eviciti at an IBM AS/400 seminar as a consulting firm that specialized in AS/400 system development. Several phone conferences and meetings with Eviciti officials convinced Milwaukee Electric Tool’s Web planners that this was the consulting firm they wanted to work with.
“Eviciti absolutely understands Milwaukee, understands our business, and knows what we want to do, and more important, knows how to do it,” Thoenes says. Eviciti showed it understood how to integrate Notes and Domino with WebSphere and the AS/400 better than IBM did, she adds.
When Milwaukee Electric Tool was working with IBM on its Internet strategy, it appeared that as of mid-1999 at least, the Lotus and WebSphere divisions weren’t able to deliver a convincing message that they knew how to work together to integrate the two products into an efficient e-business, Thoenes says. Milwaukee Electric Tool found it was able to work effectively with Eviciti, despite some basic technical challenges to integrate WebSphere, Domino, and Notes, she adds.
Nicole Bair, Eviciti’s vice president of consulting, concurs that when the company was building the Milwaukee Electric Tool sites in 2000, it was doing things that few companies had tried before. “We really had to work through it together to get things resolved and move forward,” she says.
The best evidence that Milwaukee Electric Tool and Eviciti met their basic goals was that “we got the project done on time and under budget,” Pfeil says. Milwaukee Electric Tool launched the public site in May 2000 and the secure distributor’s site in August 2000.
Internet Technology Innovation
As a result, both Eviciti and Milwaukee Electric Tool?gained the early experience of building some fairly innovative features into the sites. “We allowed different technologies to do what they really do best,” Bair says.
The Eviciti development team enabled the WebSphere Commerce Suite to handle the order processing and the product-display information; it configured Lotus Domino to handle content management; and used the WebSphere Application Server and Java technology to integrate order information, invoice information, and account details, Bair says. “A lot of times people try to jury-rig the technology to deliver a specific type of functionality. In this scenario, we just made them all work together to do what they were designed to do,” she adds.
Eviciti also used the technology to develop a sales-history feature that allows Milwaukee Electric Tool to track product sales by a number of different indexes over several years, such as dollar amounts, model numbers, part numbers, or units. This has become a valuable planning and business intelligence tool for the company. “You can see that not only in raw data terms, but you can also see that graphed” so managers can observe trends over time, Bair says.
Java technology plays a significant role in the data-acquisition and management system on the sites. The WebSphere Application Server handles the data for all visitor inquiries and records the data that supports the sales-history functions, Bair says. The site relies on Java server pages and servlets to access data from the application server or from the JD Edwards ERP system.
When Eviciti built the sites, developers were still fairly inexperienced in building live e-business sites with Java technology. “One of the things we tried to make a point of doing is to be a little bit cutting-edge–maybe a little more cutting-edge than we would have liked at the end of it,” Bair says. But the Java technology was implemented gradually as the standards matured and as the development team was confident that it could reliably implement Java components.
The key return on investment from the Milwaukee Electric Tool distributor site was a 90 percent reduction in processing costs for every order entered through the site versus sales received through the companies customer-service call center. Less tangible is the amount of money saved by reducing the overall number of inquiries to the call center because distributors or the public at large are able to go to one of the?Web sites?to look up a particular product or part, Thoenes says. “We haven’t put a dollar value to it. But we know it’s there,” she says.
The company can look at the growing number of hits and transaction sessions on the Web site and at least roughly translate what that would represent in terms of phone calls to the customer-service center, Thoenes says. Another measure of the effectiveness of the site is that both Web-site business volume and session times are up, “which means to me that they’re looking at more on the site, but they’re doing it more efficiently–they’re really optimizing their experience on the site,” Thoenes says.
At this point, there is no reason to think that Milwaukee Electric Tool will sell more tools through its Web site than it would if it didn’t have the Web site, Pfeil says. The site is designed to help generate brand loyalty and to make it easier for distributors to do business with the company.
Economically, the company’s business closely tracks the activity in the construction and manufacturing markets and it is unlikely that the existence of the Web site will have an effect on the company’s business cycle, Pfeil says. “The Web is just another tool for us,” he says.
Pfeil declines to disclose how much the company spent to develop the two Web sites. “But I can tell you it was…a very good value,” he says.
One mistake that Milwaukee Electric Tool wanted to avoid was overbuilding the sites. “We went in with such a focused strategy, it allowed us to do this with what I perceive to be a minimum investment with a lot of potential upside value,” Pfeil says.
Impact and Goals
Milwaukee Electric Tool’s plan for the future, though, is to continue to add new features that “will help us do a little better job of integrating the Internet capabilities into an overall marketing strategy,” Pfeil says. For example, he is impressed with the way some consumer sites integrate other forms of marketing media–such as print?advertising?and coupons–with special offers on the Web.
“If you build a site, not everybody is going to come to it,” Pfeil says. The company has to do more integrated marketing to make more people aware of the two Web sites to increase their use.
A new feature that Milwaukee Electric Tool will likely add is “ship immediate” service that will allow a customer to get rapid delivery of a high-priority product. Such a feature is valuable because it targets a group of customers that might find it easier to use the Web than to make a phone call.
Another future improvement might be to enhance the links between Milwaukee Electric Tool’s distributors and retail customers. Now both distributors and end users have access to the product catalog through two separate sites. Retail buyers can search to find the Milwaukee Electric Tool dealer closest to their location. But it would also be valuable to provide a way through the Web site to give dealers a way to sell through to the retail buyers who visit the public site, Pfeil says.
Milwaukee Electric Tools has gradually increased the amount of product information available through the online catalog, Thoenes says. When the company launched the site last year, the catalog listed the 400 different tool models it carries. Last year, the company added 14,000 replacement parts. Next year, it will add its line of tool accessories, which represents another 4,000 SKUs. Read more miter saw reviews to discovery other power tool of?milmaukee.
The company is also considering using the Web site to automate the filing of warranty claims to reduce the amount of paper and administrative effort required by the current manual process, Thoenes says. Milwaukee Electric Tool also has a large amount of product documentation and safety specifications that could be made available on the Web to help distributors, she adds.